Introducing Question of the Month

Image: Logan Jessop, Client Solutions

Logan Jessop, Client Solutions

 
This year we’re doing something new by sharing the answers to some of the common queries we receive from our clients.
 
Every month, we will answer a question that relates to tax pooling, provisional tax or the leading-edge smart tools we’ve developed to simplify your workflow. Our aim is to provide you with useful tips or information to help you deliver the best outcome for your clients.
 
So, without further ado, here’s our first Question of the Month: 

 

A salaried employee received one-off income after selling cryptocurrency without tax being deducted. Will they be exposed to use-of-money interest (UOMI) if they did not pay provisional tax during the 2024 tax year?

 

Exposure to UOMI will depend on the amount of residual income tax (RIT) your client is required to pay for the 2024 tax year following the sale of their cryptocurrency.

 

Your client will be treated as a provisional taxpayer for the 2024 tax year if their RIT was more than $5,000.

 

However, as standard uplift is the default provisional tax calculation method, your client will not be exposed to UOMI if their RIT for the year is less than $60,000. This is because they fall within ‘safe harbour’.

 

Their RIT will be due and payable at their terminal tax date. Your client will be exposed to UOMI and late payment penalties after their terminal tax date if they haven’t paid their RIT in full by then.

 

What if their RIT is $60,000 or more?

 

If your client’s RIT is $60,000 or more, they will be exposed to UOMI from the date of what would’ve been their final provisional tax instalment for the 2024 year.

 

UOMI will be charged on any unpaid RIT from this date. Late payment penalties will apply on any unpaid RIT from your client’s terminal tax date.

 

How Tax Traders can help

 

You can reduce the interest cost for your client if you put an arrangement in place to buy this tax from Tax Traders.

 

Your client would have up to 75 days following their terminal tax date for the 2024 year to settle the outstanding liability.

 

Click here to find out more.